This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

A cut now, but fewer ahead
The U.S. Federal Reserve lowered interest rates by 25 basis points on Wednesday, taking its overnight borrowing rate to a target range of 4.25%-4.5%. In the Fed’s dot plot indicating expectations for rates in the years ahead, the central bank mostly indicated just two rate reductions for 2025, fewer than the four cuts previously projected in September.

Bank of Japan holds rates
The Bank of Japan on Thursday kept its benchmark interest rate unchanged at 0.25%. Following that, the yen weakened to a one-month low against the dollar. Analysts had been divided over the BOJ’s move: A CNBC survey showed 54% of respondents thought the BOJ would hold, while a poll of economists by Reuters expected the BOJ to raise rates.

Sharp sell-off in markets
U.S. markets sold off sharply on Wednesday. The Dow Jones Industrial Average lost more than 1,000 points, dropping 2.58% for its 10th straight day of losses. The S&P 500 retreated 2.95% and the Nasdaq Composite sank 3.56%. On Thursday, Asia-Pacific markets followed Wall Street’s slump. South Korea’s Kospi index tumbled as much as 1.8%, one of the steepest falls in the region.

Disappointing guidance from Micron
Shares of Micron plunged more than 15% in extended trading after the company gave weaker-than-expected guidance, even though it beat expectations on earnings for its last quarter. For the current quarter, Micron expects revenue to come in around $7.9 billion. That’s far less than the $8.98 billion expected by analysts, according to LSEG.

[PRO] 2025 expectations for European equities
As the year winds down, major investment banks are putting forth their outlook on the European market for 2025. Their views range from the cautiously optimistic to the more bullish, though almost all expressed concerns over geopolitics and trade tensions.

 But investors were already confident about the Fed’s cut Wednesday. Prior to the conclusion of the Fed’s December meeting, the futures market indicated a 98% chance of a 25 basis points cut, according to the CME FedWatch Tool. That means investors had already priced in the benefits of the rate reduction into stocks. In other words, yesterday’s cut would have little bearing on stock prices.  

Investors were perhaps already pricing in more than a single reduction in rates. A week ago, investors were betting on a 20.8% chance of the Fed lowering rates to 4%-4.25% in January.

Fed Chair Jerome Powell dashed those hopes.

“With today’s action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” Powell said at his post-meeting news conference. “We can therefore be more cautious as we consider further adjustments to our policy rate.”

The possibility of a 25 point cut next month dwindled to 8.6%, according to the futures market, after the Fed released its updated dot plot indicating only two cuts for 2025.

It’s this shift — from hopes that the Fed will go full throttle with cuts to the reality that it might even lift its foot off the accelerator – that is sending tremors through the markets.

To put it another way: It’s like waking up in anticipation of a present on Christmas day, only to find yourself bereft of gifts. That disappointment wouldn’t happen at any other time of the year.

As David Russell, global head of market strategy at TradeStation, glumly noted, “Good-bye punch bowl. No Christmas cheer from the Fed.”

— CNBC’s Daria Mercado, Jeff Cox, Yun Li, Brian Evans and Lisa Kailai Han contributed to this report.